<PAGE>

                    U.S. SECURITIES AND EXCHANGE COMMISSION
                           Washington, D. C.  20549

                                  FORM 10-QSB

(Mark One)

   X      Quarterly report pursuant to Section 13 or 15(d) of the Securities
  ---     Exchange Act of 1934
               For the quarterly period ended June 30, 2000 or
          Transition report pursuant to Section 13 or 15(d) of the Securities
  ---     Exchange Act of 1934
               For the transition period from ________ to ________


Commission File No. 0-13836


                         SILICON VALLEY RESEARCH, INC.
                         -----------------------------
       (Exact name of small business issuer as specified in its charter)


               California                                 94-2743735
--------------------------------------------------------------------------------
      (State or other jurisdiction of                    (IRS Employer
      incorporation or organization)                  Identification No.)


  6360 San Ignacio Avenue     San Jose, CA                      95119-1231
--------------------------------------------------------------------------------
  (Address of principal executive offices)                      (Zip Code)

                                (408) 361-0333
--------------------------------------------------------------------------------
              Registrant's telephone number, including area code


--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                     YES X                NO___
                        ---

State the number of shares outstanding of each of the Issuer's classes of common
equity, as of the latest practicable date.

            Common Shares Outstanding at June 30, 2000:  35,569,718

Transitional Small Business Disclosure Statement Format (Check One) YES____
NO   X
     -


       This report contains 21 pages. The exhibit index is on page 19.
<PAGE>

                SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES

                                     INDEX

<TABLE>
<CAPTION>
                                                                                             Pages
                                                                                             -----
<S>                                                                                          <C>
Part I.      FINANCIAL INFORMATION
             ---------------------

             Item 1.     Financial Statements

                    Consolidated Balance Sheet -
                      June 30, 2000 (unaudited)                                                  3

                    Consolidated Statements of Operations -
                      Three Months Ended June 30, 2000 and 1999 (unaudited)                      4

                    Consolidated Condensed Statements of Cash Flows -
                      Three Months Ended June 30, 2000 and 1999 (unaudited)                      5

                    Notes to Consolidated Financial Statements                                 6-8

             Item 2.     Management's Discussion and Analysis of
                         Financial Condition and Results of
                         Operations                                                           9-17

             Item 3.     Quantitative and Qualitative Disclosures About Market Risk             17

Part II.     OTHER INFORMATION                                                               18-19
             -----------------

             Item 1      Legal Proceedings
             Item 2      Changes in Securities and Use of Proceeds
             Item 3      Defaults Upon Senior Securities
             Item 4      Submission of Matters to a Vote of
                         Securities Holders
             Item 5      Other Information
             Item 6      Exhibits and Reports on Form 8-K

             Signatures                                                                         20

Exhibit 27.  Financial Data Schedule                                                            21
</TABLE>

                                 Page 2 of 21
<PAGE>

                        PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
                          Consolidated Balance Sheet
                                (In thousands)

<TABLE>
<CAPTION>
Assets                                                          June 30, 2000
------                                                          -------------
                                                                 (Unaudited)
<S>                                                             <C>
Current Assets:
 Cash and cash equivalents                                           $    307
 Accounts receivable, net of allowances of $85                          1,380
 Prepaid expenses and other current assets                                 60
                                                                     --------
                                                                        1,747

Fixed assets, net                                                         242
Other assets, net                                                         477
                                                                     --------
                                                                     $  2,466
                                                                     ========

Liabilities and Shareholders' Equity
------------------------------------

Current Liabilities:
 Notes payable                                                       $     25
 Accounts payable                                                         321
 Accrued expenses                                                         138
 Deferred revenue                                                           1
                                                                     --------
                                                                          485
                                                                     --------

Long-term debt, less current portion                                      956
                                                                     --------
Deferred tax liability                                                     17
                                                                     --------

Commitments and Contingencies (Note 7)

Shareholders' Equity:
Preferred stock, no par value:
 Authorized: 1,000 shares
 Issued and outstanding: none                                              --
Common stock, no par value:
 Authorized: 60,000 shares
 Issued and outstanding:
  35,570 shares                                                        45,336
Accumulated deficit                                                   (44,328)
                                                                     --------
                                                                        1,008
                                                                     --------

                                                                     $  2,466
                                                                     ========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                 Page 3 of 21
<PAGE>

                SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
                     Consolidated Statements of Operations
                                  (Unaudited)
                     (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                        Three Months Ended
                                                             June 30,
                                                        2000          1999
                                                        ----          ----
<S>                                                    <C>           <C>
Revenue:
 License fees and other                                $   585       $    58
 Maintenance and services                                  184           251
                                                       -------       -------
 Total revenue                                             769           309
                                                       -------       -------

Cost of revenue:
 License fees and other                                     66            80
 Maintenance and services                                  113           131
                                                       -------       -------
 Total cost of revenue                                     179           211
                                                       -------       -------

Gross margin                                               590            98
                                                       -------       -------

Operating expenses:
 Engineering, research and development                     160           451
 Selling and marketing                                     205           207
 General and administrative                                155           185
                                                       -------       -------
 Total operating expenses                                  520           843
                                                       -------       -------

Operating income (loss)                                     70          (745)
                                                       -------       -------

Other income (expense):
 Interest income                                             6            --
 Interest expense                                          (25)           --
 Other, net                                                 --           107
                                                       -------       -------
 Total other income (expense)                              (19)          107
                                                       -------       -------

Income (loss) before provision for
 Income taxes                                               51          (638)

Provision for income taxes                                  --            --
                                                       -------       -------

Net income (loss)                                      $    51       $  (638)
                                                       =======       =======

Net income (loss) per basic share                      $  0.00       $ (0.02)
                                                       =======       =======

Weighted-average common shares
 outstanding (basic)                                    35,517        26,217
                                                       =======       =======

Net income (loss) per diluted share                    $  0.00       $ (0.02)
                                                       =======       =======

Weighted-average common shares
 outstanding (diluted)                                  37,411        26,217
                                                       =======       =======
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                 Page 4 of 21
<PAGE>

                SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
                Consolidated Condensed Statements of Cash Flows
                                  (Unaudited)
                                (In thousands)

<TABLE>
<CAPTION>
                                                           Three Months Ended
                                                                 June 30,
                                                            2000         1999
                                                            ----         ----
<S>                                                        <C>         <C>
Cash Flows from Operating Activities:
Net income (loss)                                          $  51       $(638)
Adjustments to reconcile net loss to net
cash used in operating activities:
 Depreciation and amortization:
  Fixed assets                                                28          44
  Software licenses and development costs                     71         127
 Gain on cancellation of debt                                 --         (96)
Changes in assets and liabilities, net:
 Accounts receivable                                        (488)        238
 Prepaid expenses and other current assets                    61          14
 Accounts payable                                             55        (105)
 Accrued expenses                                           (153)         15
 Deferred maintenance revenue                                 (7)        (89)
 Other, net                                                   13          21
                                                           -----       -----

Net cash used in operating activities                       (369)       (469)
                                                           -----       -----

Cash Flows from Investing Activities:
Acquisition of fixed assets                                 (147)         (7)
                                                           -----       -----

Net cash used in investing activities                       (147)         (7)
                                                           -----       -----

Cash Flows from Financing Activities:
Proceeds from subordinated debt financing                     --         712
Principal payments on long-term debt                          --        (135)
Proceeds from issuance of common stock and warrants            8          56
                                                           -----       -----

Net cash provided by financing activities                      8         633
                                                           -----       -----

Effect of exchange rate changes on cash                       --          14
                                                           -----       -----

Net increase (decrease) in cash and
 cash equivalents                                           (508)        171
Cash and cash equivalents at beginning
 of period                                                   815         247
                                                           -----       -----

Cash and cash equivalents at end
 of period                                                 $ 307       $ 418
                                                           =====       =====
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                 Page 5 of 21
<PAGE>

                SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           June 30, 2000 - Unaudited
                                (In thousands)

Note 1:  Basis of Presentation and Financial Statement Information

     The accompanying consolidated financial statements have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission for interim financial statements. Therefore, they do not include all
the disclosures which were presented in the Company's annual report on Form 10-
KSB. These financial statements do not include all disclosures required by
generally accepted accounting principles and accordingly, should be read in
conjunction with the consolidated financial statements and notes included as
part of the Company's latest annual report on Form 10-KSB.

     In the opinion of management, the consolidated financial statements include
all adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the consolidated financial position, results of operations and
cash flows for the interim period.  The results of operations presented are not
necessarily indicative of the results to be expected for the full year or for
any other period.

     The report of Moss Adams LLP on the Company's fiscal 2000 consolidated
financial statements dated May 12, 2000 included an explanatory paragraph
regarding the Company's ability to continue as a going concern.  There can be no
assurance that the Company will not continue to incur significant operating
losses or that required additional financing will be available to meet the
Company's business plans in fiscal 2001 and beyond.

Note 2:  Earnings Per Share

     The Company has adopted Statement of Financial Accounting Standards No. 128
"Earnings per Share" (FAS 128).  Under FAS 128, the Company presents two EPS
amounts.  Basic EPS is calculated based on income or loss to common shareholders
and the weighted-average number of shares outstanding during the reported
period.  Diluted EPS includes additional dilution from common stock equivalents,
such as stock issuable pursuant to the exercise of stock options and warrants.
Common stock equivalents were not included in the computation of diluted
earnings per share when the Company reported a loss because to do so would have
been antidilutive for the periods presented.

     The following is a reconciliation of the computation for basic and diluted
EPS:

<TABLE>
<CAPTION>
                                                  Three Months Ended
                                                       June 30,

                                                    2000      1999
                                                  -------    -------
<S>                                               <C>        <C>
Net income (loss)                                 $    51    $  (638)
                                                  =======    =======

Weighted-average common shares
  outstanding (basic)                              35,517     26,217

Weighted-average common stock equivalents:
  Stock options                                     1,560         --
  Warrants                                            334         --
                                                  -------    -------
Weighted-average common shares
  outstanding (diluted)                            37,411     26,217
                                                  =======    =======
</TABLE>

                                 Page 6 of 21
<PAGE>

                 SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                           June 30, 2000 - Unaudited
                                 (In thousands)

Note 3:  Comprehensive Income (Loss)

     The Company has adopted Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income."  This Statement requires that all items
recognized under accounting standards as components of comprehensive earnings be
reported in an annual financial statement that is displayed with the same
prominence as other annual financial statements.  This Statement also requires
that an entity classify items of other comprehensive earnings by their nature in
an annual financial statement.  Other comprehensive earnings in these financial
statements include foreign currency translation adjustments.  The Company's
total comprehensive earnings were as follows:

<TABLE>
<CAPTION>
                                                                                        Three Months Ended
                                                                                             June 30,
                                                                                       2000           1999
                                                                                       ----           ----
<S>                                                                                  <C>            <C>
Net income (loss)                                                                    $     51       $   (638)
Other comprehensive gain                                                                   --             14
                                                                                     --------       --------
     Total comprehensive income (loss)                                               $     51       $   (624)
                                                                                     ========       ========
</TABLE>

Note 4:  Statement of Cash Flows Information

<TABLE>
<CAPTION>
                                                                                        Three Months Ended
                                                                                             June 30,
                                                                                       2000          1999
                                                                                       ----          ----
<S>                                                                                  <C>            <C>
Supplemental Cash Flow Information:
Cash paid during the period for:
     Interest                                                                        $      8       $    --
     Income Taxes                                                                    $     --       $    --
Non-cash investing and financing activities:
     Warrants for common stock issued
      for cancellation of indebtedness                                               $     --       $   131
     Common stock issued in exchange for
      note payable                                                                   $     44       $    --
</TABLE>

Note 5:  Balance Sheet Components

<TABLE>
<CAPTION>
                                                                                              June 30, 2000
                                                                                              -------------
<S>                                                                                           <C>
Other Assets:
Software development costs                                                                    $         942
Software licenses                                                                                       979
                                                                                              -------------
                                                                                                      1,921
Less accumulated amortization                                                                        (1,648)
                                                                                              -------------
                                                                                                        273
Prepaid royalties, net                                                                                   25
Goodwill                                                                                                134
Other                                                                                                    45
                                                                                               ------------
                                                                                               $        477
                                                                                               ============
Accrued Expenses:
Payroll and related costs                                                                      $         58
Taxes payable                                                                                            38
Other                                                                                                    42
                                                                                               ------------
                                                                                               $        138
                                                                                               ============
</TABLE>

                                 Page 7 of 21
<PAGE>

                 SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                           June 30, 2000 - Unaudited
                                 (In thousands)

Note 6:  Subordinated Debt Financing

     In June 1999, the Company began a subordinated debt/warrant financing. The
financing included approximately $1,000 of three-year notes and the sale of
approximately 8,000 Warrants at $0.01 per Warrant. The debt bears simple
interest of 10% and the Warrants have a five-year term with an exercise price
per share of $0.125. This financing transaction consists of two closings. The
first closing took place on June 7, 1999. The Company received $768 cash
proceeds from this closing. This included $711 of three-year notes and the sale
of approximately 5,700 Warrants at $0.01 per Warrant. The second closing was to
have taken place on July 15, 1999. The closing was extended until September 24,
1999 pending negotiation of a workout with the Creditors' Committee through the
Credit Managers' Association to resolve accounts payable issues that was
satisfactory to the majority of the investors. An agreement was reached and the
Company received approximately $312 cash proceeds from the second closing. The
Company has used part of the proceeds from the financing to complete the
Settlement Agreement with its lender and to pay other accounts payable and used
the balance of the proceeds to help fund its operations. The Company's CEO, the
Company's Chairman of the Board, an affiliate of a Company director and two
Company 10% shareholders participated in the financing.

Note 7:  Commitments and Contingencies

     As with other companies in industries similar to Silicon Valley Research,
Inc., the Company is subject to the risk of adverse claims and litigation on a
variety of matters, including infringement of intellectual property, intentional
and/or negligent misrepresentation of material facts and breach of fiduciary
duties.

Note 8:  Recent Accounting Pronouncements

     In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use."  Statement of Position 98-1
provides guidance for determining whether computer software is internal-use
software and on capitalization of the costs associated with internal-use
computer software.  It also provides guidance on accounting for the proceeds of
computer software originally developed or obtained for internal use and then
subsequently sold to the public.  The disclosures prescribed by Statement of
Position 98-1 were effective for the year ending March 31, 2000 consolidated
financial statements.

Note 9:  Year 2000 Issues

     The "Year 2000 Issue" arises because most computer systems and programs
were designed to handle only a two-digit year, as opposed to a four-digit year.
The Company has not experienced and does not anticipate any material adverse
effects from Y2K on its operations or financial position.

                                 Page 8 of 21
<PAGE>

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                 (In thousands)

This Management's Discussion and Analysis of Financial Condition and Results of
Operations includes a number of forward-looking statements, which reflect
Silicon Valley Research, Inc.'s ("the Company" or "SVR") current view with
respect to future events and financial performance. These forward-looking
statements are subject to certain risks and uncertainties, including those
discussed in the Other Factors Affecting Future Results section of this Item 2,
elsewhere in this Form 10-QSB and as set forth in the Company's form 10-KSB on
file with the SEC, that could cause actual results to differ materially from
historical results or those anticipated. Some of the examples of forward-looking
statements in this report include the Company's plans to resume business in
Japan and other countries in the Far East, a possible source of cash is the
potential exercise of outstanding warrants, and the Company's ability to not
require financing if revenue increases as anticipated and the Company maintains
its cost reductions. In this report, the words "anticipates," "believes,"
"expects," "intends," "future," and similar expressions identify forward-looking
statements. Readers are cautioned not to place undue reliance on these forward-
looking statements, which speak only as of the date hereof.

RESULTS OF OPERATIONS

REVENUE

     Revenue for the first quarter of fiscal year 2001, which ended June 30,
2000, was $769, an increase from $309 in the first quarter a year ago. Several
key factors contributed to the increase in revenue, including the Company's new
distribution agreement with The Shearwater Group, a global distributor and
reseller of EDA (Electronic Design Automation) software and the reorganization
efforts made during calendar 1999. The Company had no international sales in the
first quarter of fiscal 2001 compared to international sales comprising 2% of
the Company's total revenue in the first quarter a year ago. Prior to fiscal
2000, international sales were made primarily in Japan and other countries in
the Far East. The Company intends to resume doing business in these areas in the
future through its distributors.

     A substantial portion of the Company's revenues in each quarter results
from shipments during the last month of that quarter, and for that reason among
others, the Company's revenues are subject to significant quarterly
fluctuations.  If revenue levels are below expectations, operating results may
be materially and adversely affected.  In addition, the Company's quarterly and
annual results may fluctuate as a result of many factors, including the size and
timing of software license fees and service contracts, timing of co-development
projects with customers, timing of operating expenditures, increased
competition, new product announcements and releases by the Company and its
competitors, gain or loss of significant customers or distributors, expense
levels, renewal of maintenance contracts, pricing changes by the Company or its
competitors, personnel changes, foreign currency exchange rates, and economic
conditions generally and in the electronics industry specifically.

     The Company's expense levels are based, in part, on its expectations as to
future revenue levels, which are difficult to predict.

COST OF REVENUE

     Cost of license fees and other for the first quarter of fiscal year 2001
was $66 as compared to $80 in the first quarter of fiscal 2000. Cost of sales of
license fees and other is primarily the amortization of software development
costs and is not a function of revenue.

     Cost of maintenance and services for the first quarter of fiscal year 2001
was $113 compared to $131 in the first quarter of fiscal 2000. Cost of
maintenance and services is primarily the cost of providing design services,
technical support and technical documentation.

ENGINEERING, RESEARCH AND DEVELOPMENT EXPENSES

     Engineering, research and development expenses for the first quarter of
fiscal year 2001 were $160 compared to $451 in the first quarter a year ago.
Comparing the first quarter of fiscal 2001 and the first quarter

                                 Page 9 of 21
<PAGE>

of fiscal 2000, engineering, research and development expenses were 21% and 146%
of total revenue, respectively. The decrease in engineering, research and
development expenses is due to cost-cutting measures instituted by management,
including a reduction in personnel. While the Company has maintained an
emphasis on new product research and development, the Company's current
products are further along in the development cycle and have reached the stage
of maturity where they require less investment for development.

SELLING AND MARKETING EXPENSES

     Selling and marketing expenses for the first quarter of fiscal year 2001
decreased to $205 from $207 in the first quarter a year ago.  In the first
quarter of fiscal 2001 and the first quarter of fiscal 2000, selling and
marketing expenses were 27% and 67% of total revenue, respectively.  The
consistency in selling and marketing expenses is due to costs associated with
the Company's participation in an annual trade show, which takes place in
June, which makes up the bulk of the Company's selling and marketing expenses.

GENERAL AND ADMINISTRATIVE EXPENSES

     General and administrative expenses decreased to $155 for the first quarter
of fiscal year 2001 from $185 in the first quarter a year ago. In the first
quarter of fiscal 2001 and the first quarter of fiscal 2000, general and
administrative expenses were 20% and 60% of total revenue, respectively. The
decrease is due to the effects of the Company's cost-cutting measures, including
a reduction in professional fees.

Other income (expense)

     Other income for the first three months of fiscal year 2000 includes $107
gain recognized on the cancellation of indebtedness.

LIQUIDITY AND CAPITAL RESOURCES

     Since inception, the Company has financed its operations primarily through
sales of equity securities and to a lesser extent, cash generated from
operations.  During the three months ended June 30, 2000, cash and cash
equivalents decreased $508 from $815 to $307.  This decrease resulted from cash
provided by the financing activities of $8 less cash used by operations of $369
and less $147 of cash used for investing activities.  The Company received
approximately $8 from the exercise of outstanding warrants.  A possible future
source of cash for the Company is the potential exercise of outstanding warrants
if the Company's stock price were to increase.

     Although, the Company reported net income for the three months ended June
30, 2000, at June 30, 2000, the Company had an accumulated deficit of $44,328.
The continuance of profitability is primarily dependent upon the continued
development and commercial acceptance of the Company's products, the successful
management of the business, management's ability to strategically focus the
Company and the distributor's marketing and sales ability.  There can be no
assurance that profitable operations will continue.  In addition, primarily
because of a longer collection period for its receivables resulting from its use
of a distributor, The Shearwater Group, the Company is experiencing negative
cash flow from operations and may continue to experience negative cash flow from
operations for a portion of fiscal 2001 and potentially thereafter.

     The Company's primary unused sources of funds at June 30, 2000 consisted of
cash and cash equivalents of $307.

                                 Page 10 of 21
<PAGE>

     The Company's operations have required substantial cash in the past; for
example, $369 during the first three months of fiscal 2001. Management has
implemented cost reducing measures and expects revenues to increase during the
remainder of fiscal 2001. The Company is also required to pay several
creditors approximately $95 during calendar year 2000 in settlement of a
workout agreement. Assuming management is successful with its cost reduction
and revenue achievement programs, the Company expects to fund future
operations without requiring additional financing. However, it is possible
that it could require additional financing to fund future operations. If such
an event is necessary, the Company may not be able to obtain financing on
favorable terms if at all.

     The Company may issue one or more series of Preferred Stock with rights,
preferences, or privileges senior to those of the Common Stock. It has no
commitments or arrangements to obtain any additional funding and there is no
assurance that the amount of capital required will be available on acceptable
terms, if at all. However, because its Common Stock was delisted from trading
on the NASDAQ national market in November, 1998, and now trades in the over-
the-counter market, its ability to sell Common Stock or securities convertible
into Common Stock may be adversely affected. See "Delisting From NASDAQ;
Disclosure Relating to Low-Priced Stock" below for possible effect of current
common stock trading on future issuances.

     The unavailability or timing of any financing could prevent or delay the
Company's continued development and marketing of SVR products and services.  In
addition, substantial curtailment of its operations may be required which could
result in bankruptcy.

Other Factors Affecting Future Results

Recent and Expected Losses; Accumulated Deficit.  Although for the quarter ended
-----------------------------------------------
June 30, 2000 the Company reported net income of $51, the Company had an
accumulated deficit of approximately $44,328 as of June 30, 2000.  The Company
may incur future losses.  There is no assurance that the Company will generate
positive cash flow from operations or that the Company will sustain
profitability in the future.  To the extent the Company grows or incurs losses,
its operating and investing activities may use cash and, consequently,
additional sources of financing may be required or operating expenses reduced in
the future.

Need for Future Financing.  As described above, under Management Discussion and
-------------------------
Analysis-Liquidity and Capital Resources, as long as SVR revenues continue to
increase as anticipated and the Company is able to implement and maintain cost
reduction measures, the Company does not expect to require additional
financing to fund operations in the future. However, if the Company cannot
achieve anticipated revenues, the Company may require additional funding due
to the cash requirements to service its current debt and any negative cash
flow from operations. There can be no assurance that the Company will be able
to raise such financing or that any such financing the Company is able to
conduct will be on attractive terms.

Going Concern Assumptions.  The Company's independent accountants' report on its
-------------------------
consolidated financial statements as of and for the years ended March 31, 2000
and 1999 contain an explanatory paragraph indicating that historical operating
losses and limited capital resources raise substantial doubt about the Company's
ability to continue as a going concern.  If the Company is unable to generate
sufficient cash from operations or if necessary, raise sufficient funds to cover
the cost of its operations, it is likely that any independent accountant's
report on future financial statements will include a similar explanatory
paragraph.

Dependence on Certain Customers and Resellers.  The Company has entered into an
---------------------------------------------
agreement with The Shearwater Group in November 1999 that provides that The
Shearwater Group will be the exclusive worldwide distributor for all of SVR
products for a minimum term of one year. Such contract exclusivity will
automatically be extended upon the achievement of certain sales goals for an
additional one-year period. Otherwise, the Company and The Shearwater Group
would negotiate the terms of extension, including exclusivity. While The
Shearwater Group has a financial incentive to sell SVR products and their
initial sales performance has been satisfactory, they have no contractual
obligation to sell SVR products. There can be no assurance that the
distributor will be able
                                 Page 11 of 21
<PAGE>

to successfully distribute and support SVR products on a timely basis or that
such distributor will not reduce their efforts devoted to selling SVR products.
There can be no assurance that the contract with the distributor will be
automatically extended or renewed, and if renewed, what the terms would be. The
loss of, or changes in, the relationship with, or performance by, the Company's
distributor could have an adverse effect on the Company's business.

     A small number of customers account for a significant percentage of SVR
total revenue.  For the first three months of fiscal 2001, two customers
accounted for 88% of the Company's total revenue.  In fiscal 2000, three
customers accounted for 41% of the Company's revenue.  There can be no assurance
that sales to these entities, individually or as a group, will reach or exceed
historical levels in any future period.  Any substantial decrease in sales to
one or more of these customers could have a material adverse effect on the
Company's business, operating results or financial condition.

New Products and Rapid Technological Change; Risk of Product Defects.  The
--------------------------------------------------------------------
Electronic Design Automation ("EDA") industry is characterized by the following:

-- extremely rapid technological change
-- frequent new product introductions and enhancements
-- evolving industry standards
-- rapidly changing customer requirements.

     The development of more complex integrated circuits with new technologies
will require more sophisticated design tools.  The success of SVR's future
operations partly depends upon its ability to enhance SVR current products and
to develop and introduce new products on a timely and cost-effective basis.  SVR
products and services must keep pace with technological developments and
evolving industry standards and methodologies, as well as address the
increasingly sophisticated needs of customers.  During fiscal 2001, SVR will
have an aggressive new product release and current product update program, upon
which expected revenue increases are partially based.  It is possible that in
the future, the Company may experience delays in new product development and
product enhancements.  The Company has experienced similar delays in the past.
Such delays would likely decrease expected fiscal 2001 revenues, which could
cause the Company to incur losses and utilize its available cash or even run out
of cash.

     The Company announced a new product named QIC/APR.  However, there is no
guarantee that:

-- this new product will gain market acceptance
-- the Company will be successful in developing and marketing product
   enhancements
-- the Company will be successful in developing other new products that respond
   to technological change, evolving industry standards and changing customer
   requirements
-- the Company will not experience difficulties that could delay or prevent the
   successful development introduction and marketing of these products or
   product enhancements
-- new products and product enhancements will adequately meet the requirements
   of the marketplace and achieve any significant degree of market acceptance

     All of SVR present products operate in the Unix and/or Linux operating
systems and the Company intends for all future products to operate in the Unix
operating system, as well as the Linux operating system.  In the event that
another operating system, such as Windows NT, were to achieve broad acceptance
in the EDA industry, the Company would be required to port its products.  This
would be costly and time consuming and could have a material adverse effect on
the Company's business, operating results or financial condition.  If the
Company fails to develop and introduce new products and product enhancements in
a timely and cost-effective manner, for technological or other reasons, it could
also have material and adverse effects on the Company's business, operating
results and financial condition.  Introducing or even announcing new products by
SVR or its competitors, including new technologies or changes in industry
standards or customer requirements, could render some or all of SVR existing
products obsolete or unmarketable.  Furthermore, customers might defer purchases
due to the introduction or announcement, which would also have a material
adverse effect on the Company's business, operating results or financial
condition.

                                 Page 12 of 21
<PAGE>

     Complex software products, such as those SVR offers, can contain defects or
even fail when introduced or released.  The Company has, in the past, discovered
defects in certain of its products.  The Company may experience delays or lost
revenue in connection with repairs and corrections of defects it finds in the
future.  Although to date the Company has not experienced material adverse
effects resulting from defects, it is possible in the future that despite
testing, errors will go undiscovered in new products or releases until after
shipment.  These errors may result in loss of market share or failure to achieve
market acceptance.  If this were to occur, it could have a material adverse
effect upon the Company's business, operating results or financial condition.

Delisting From NASDAQ; Disclosure Relating to Low-Priced Stock.  SVR common
--------------------------------------------------------------
stock was delisted from trading on the NASDAQ National Market November 16, 1998.
SVR common stock immediately began trading on the OTC Bulletin Board.  As a
result, the Company's ability to obtain additional financing through the
issuance of common stock or securities convertible into common stock may be
adversely affected.  Investors might find that disposing of SVR common stock is
more difficult than it has been in the past.  The trading price of SVR common
stock is currently less than $5.00 per share.  Because the Company's common
stock falls into the category defined as penny stock, trading in the common
stock is currently subject to certain rules promulgated under the Exchange Act,
which require additional disclosure by broker-dealers.  These rules require the
Company, in advance of trading, to provide investors with disclosure schedules,
which explain the penny stock market and associated risks.  The rules impose
various sales practice requirements on broker-dealers who sell penny stock.
Broker-dealers engaging in some types of these transactions must make a special
suitability determination and obtain investors written consent prior to sale.
This additional burden may discourage broker-dealers from actively effectuating
common stock transactions, which in turn could have the adverse effect of
severely limiting the marketability of SVR common stock.  Therefore, the ability
of Silicon Valley Research, Inc. shareholders to resell their stock would be
limited.  In turn, this could adversely effect the Company's ability to obtain
future equity financing.

Possible Volatility of Stock Price.  The market price of SVR common stock has
----------------------------------
been volatile.  The following events could cause the market price of SVR common
stock to fluctuate substantially:

-- future announcements concerning the Company's competitor's or quarterly
   variations in operating results
-- the introduction of technological innovations, new products, or changes in
   product pricing policies
-- proprietary rights or other litigation, or
-- changes in earnings estimates by analysts or other factors

     The stock market has from time to time experienced significant price and
volume fluctuations that have particularly affected the market prices for the
common stocks of technology companies.  These fluctuations have often been
unrelated to the operating performance of particular companies.

     In the past, shareholder class action suits have been filed against
companies following periods of volatility of stock price.  Litigation of this
nature could occur in the Company's future.  Litigation often diverts management
attention and resources and is costly to the company.  If SVR were placed in
this position, it could have a material adverse effect on the Company's
business, financial condition and operating results.  Significant liabilities
are always possible effects of litigation.

Potential Fluctuations in Quarterly Operating Results.  Numerous factors may
-----------------------------------------------------
materially and unpredictably affect the Company's operating results, including:

-- uncertainties of the size and timing of software license fees
-- timing of co-development projects with customers
-- timing of operating expenditures
-- increased competition
-- new product announcements and releases by us and our competitors
-- gain or loss of significant customers or distributors
-- expense levels

                                 Page 13 of 21
<PAGE>

-- renewal of maintenance contracts
-- pricing changes by SVR or its competitors
-- personnel changes
-- foreign currency exchange rates
-- economic conditions generally and in the electronics industry specifically

     Any unfavorable change in these or other factors could have a material
adverse effect on the Company's operating results for a particular quarter.
Many of SVR customers order on an as-needed basis and often delay delivery of
firm purchase orders until their project commencement dates are determined.  As
a result, the Company operates with no significant backlog. Therefore, quarterly
revenue and operating results will depend on the volume and timing of orders
received during the quarter, which are difficult to forecast accurately.
Historically, the Company has often recognized a substantial portion of license
revenues in the last month of the quarter, with these revenues frequently
concentrated in the last two weeks of the quarter.  The Company's operating
results would be disproportionately affected by a reduction in revenue because
only a small portion of expenses vary with revenue.  Operating results in any
period should not be considered indicative of the results to be expected for any
future period.  The Company's revenues may or may not increase and the Company
may or may not become profitable.

Lengthy Sales Cycle.  The licensing and sale of SVR software products generally
-------------------
involve a significant commitment of capital from prospective customers.  Delays
are frequently associated with large capital expenditures and lengthy acceptance
procedures.  For these and other reasons, the sales cycle associated with the
licensing of SVR products is typically lengthy and subject to a number of
significant risks over which the Company has little or no control.  Because the
timing of customer orders is hard to predict, the Company believes that
quarterly operating results are likely to vary significantly in the future.  The
Company's actual results could vary materially as a result of a variety of
factors, including, without limitation:

-- the high average selling price and long sales cycle for SVR products
-- the relatively small number of orders per quarter
-- dependence on sales to a limited number of large customers
-- timing of receipt of orders
-- successful product introduction
-- acceptance of our products and increased competition

Dependence Upon Semiconductor and Electronics Industries; General Economic and
------------------------------------------------------------------------------
Market Conditions.  Silicon Valley Research, Inc. is dependent upon the
-----------------
semiconductor and, more generally, the electronics industries.  Each of these
industries is characterized by rapid technological change, short product life
cycles, fluctuations in manufacturing capacity and pricing.  Each of these
industries is highly volatile and has periodically experienced significant
downturns.  Often in connection with, or in anticipation of, declines in general
economic conditions, the number of new integrated circuit design projects often
decreases.  SVR customers' purchases of new licenses are largely dependent upon
the commencement of new design projects.  Factors negatively affecting any of
these industries could have a material adverse effect on the Company's business,
operating results or financial condition.  The Company's business, operating
results and financial condition may in the future reflect substantial
fluctuations from period to period due to patterns and general economic
conditions in either the semiconductor or electronics industry.

International Sales.  International sales, primarily in Japan and Taiwan,
-------------------
accounted for approximately 5% of the total revenue in fiscal 2000 and 36% in
1999.  Declining revenues from international sales resulted primarily from the
closure of the Company's Tokyo office in December 1998 and Taiwan office in
March 1999, brought about, in part, by a reduction in capital expenditures by
semiconductor manufacturers, particularly in Asia, as a result of the current
financial crisis in that region, and increased competition in the EDA software
market.  The Company expects that international sales through The Shearwater
Group, or upon their consent, one or more other distributors, will once again
account for a significant portion of SVR revenue by the end of fiscal 2001, as
had been the case prior to fiscal 2000.  However, this revenue involves a number
of inherent risks, including:

                                 Page 14 of 21
<PAGE>

-- economic downturn in the electronics industry in Asia
-- traditionally slower adoption of SVR products internationally
-- general strikes or other disruptions in working conditions
-- generally longer receivables collection periods
-- unexpected changes in or impositions of legislative or regulatory
   requirements
-- reduced protection for intellectual property rights in some countries
-- potentially adverse taxes
-- delays resulting from difficulty in obtaining export licenses for certain
   technology
-- other trade barriers
-- The Shearwater Group's performance under the distributor agreement
-- obtaining The Shearwater Group's consent and obtaining quality distributors
   if The Shearwater Group is not adequate to increase revenues

     The factors listed above may have a material adverse effect on the
Company's future international sales and, consequently, on the Company's
operating results.

     Effective December 1998, the Company discontinued operating its Tokyo
office and in March 1999, the Company discontinued operating its Taiwan office.
In the future, the Company will use The Shearwater Group or another distributor
to service the Japanese and Taiwanese markets.

Competition.  The EDA software market in which Silicon Valley Research, Inc.
-----------
competes is intensely competitive and subject to rapid technological change.
The Company currently faces competition from EDA vendors, including Cadence,
which currently holds the dominant share of the market for integrated circuit
physical design software, Avant! and Synopsys.  These EDA vendors have
significantly greater financial, technical and marketing resources, greater name
recognition and a larger installed customer base than the Company.  These
companies also have established relationships with current and potential
customers of the Company and can devote substantial resources aimed at
preventing the Company from enhancing relationships with existing customers or
establishing relationships with potential customers.  The Company believes that
competitive factors in the EDA software market include:

-- product performance
-- price
-- support of industry standards
-- ease of use
-- delivery schedule
-- product enhancement
-- customer technical support and service

     Competition from other EDA companies that choose to enter the integrated
circuit physical design market could present particularly formidable competition
due to their large installed customer base and their ability to offer a complete
integrated circuit design solution.  The Company expects additional competition
from other established and emerging companies.  In addition, the EDA industry
has become increasingly concentrated in recent years as a result of
consolidations, acquisitions and strategic alliances.  Accordingly, it is
possible that new competitors or alliances among competitors could emerge and
rapidly acquire significant market share.  There can be no assurance that the
Company will be able to compete successfully against current and future
competitors or that competitive pressures faced by the Company will not have a
material adverse effect on the Company's business, operating results and
financial condition.

Management Transition.  Silicon Valley Research, Inc. is experiencing a period
---------------------
of management transition that has placed, and may continue to place, a
significant strain on its resources, including its personnel.  James O. Benouis
joined the Company in March 1998 as President and Chief Operating Officer.  On
August 4, 1998, Mr. Benouis was appointed Chief Executive Officer.  Effective
April 2, 1999, Laurence G. Colegate, Jr. resigned as Chief Financial Officer.

                                 Page 15 of 21
<PAGE>

     The Company's ability to manage growth successfully will require management
personnel to work together effectively and will require the Company to improve
our operational, management and financial systems and controls.  If management
is unable to bring about this transition effectively, the Company's business,
competitive position, results of operations and financial condition will be
materially and adversely affected.  See "Dependence on Key Personnel" below.

Dependence on Key Personnel.  The Company's success depends to a significant
---------------------------
extent upon a number of key technical and management employees, in particular,
James O. Benouis, President and Chief Executive Officer.  The Company does not
currently have "key man" life insurance on Mr. Benouis.  The loss of services of
Mr. Benouis or any other key employees could have a material adverse effect on
the Company.  See "Management Transition" above.

     Also, the Company's success depends in large part on its ability to attract
and retain highly skilled technical, managerial, sales and marketing personnel.
Competition for such talented personnel is intense.  There can be no assurance
that the Company will be successful in retaining key technical and management
personnel or in attracting and retaining the personnel it requires now in order
to grow.

Proprietary Rights.  Silicon Valley Research, Inc. relies on contract, trade
------------------
secret and copyright law to protect its technology.  Competitors may develop
similar or superior technologies or duplicate SVR technology.  The Company
generally enters into confidentiality or license agreements with its employees,
distributors and customers, and limits access to and distribution of SVR
software, documentation and other proprietary information.  Despite these
precautions, it is possible for a third party to copy or otherwise obtain and
use SVR products or technology without authorization, or to develop similar
technology independently.  In addition, effective copyright and trade protection
may be unavailable or limited in certain foreign countries.

     There has been substantial industry litigation regarding patents and other
intellectual property rights involving technology companies.  In the future,
litigation may be necessary to protect and enforce SVR intellectual property
rights, to defend the Company against claimed infringement of the rights of
others and to determine the scope and validity of the proprietary rights of
others.  Any such litigation could be costly and could divert management's
attention, which could have a material adverse effect on the Company's business,
results of operations or financial condition regardless of the outcome of the
litigation.  In addition, third parties making claims against the Company with
respect to intellectual property infringement may block the Company's ability to
sell products in the United States and abroad, and could result in an award of
substantial damages.  In the event of a claim of infringement, Silicon Valley
Research, Inc. and its customers could be required to obtain one or more
licenses from third parties.  There can be no assurance that either SVR
customers or the Company could obtain necessary licenses from third parties at a
reasonable cost or at all.

Concentration of Stock Ownership.  The Company's present directors, executive
--------------------------------
officers and 5% shareholders and their affiliates beneficially own approximately
37% of the outstanding common stock as of June 30, 2000.  As a result, these
shareholders may be able to exercise significant influence over all matters
requiring shareholder approval, including the election of directors and approval
of significant corporate transactions.  Such concentration of ownership may have
the effect of delaying or preventing a change in control of Silicon Valley
Research, Inc.

Depressive Effect of Warrants.  The Company has a substantial number of common
-----------------------------
stock warrants outstanding with an exercise price of $0.125 (464) and of $0.37
(1,872).  These warrants may have the effect of causing SVR's stock price to be
lower than it would be otherwise.  During the first fiscal quarter of 2001, the
Company received approximately $8 from the exercise of warrants.

Effect of Certain Charter Projections; Blank Check Preferred Stock.  The
------------------------------------------------------------------
Company's Board of Directors has the authority to issue up to 1,000 shares of
preferred stock and to determine the price, rights, preferences, privileges and
restrictions, including voting rights, without any further vote or action by
shareholders.  The rights of the holders of the common stock will be subject to,
and may be adversely affected by, the rights of the holders of any preferred
stock that may be issued in the future.  The issuance of preferred stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire a majority of our outstanding voting stock.

                                 Page 16 of 21
<PAGE>

Inflation.  To date, inflation has not had a significant impact on the results
---------
of the Company's operations.

Recent Accounting Pronouncements.  In April 1998, the American Institute of
--------------------------------
Certified Public Accountants issued Statement of Position 98-1, "Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use."
Statement of Position 98-1 provides guidance for determining whether computer
software is internal-use software and on capitalization of the costs associated
with internal-use computer software.  It also provides guidance on accounting
for the proceeds of computer software originally developed or obtained for
internal use and then subsequently sold to the public.  The disclosures
prescribed by Statement of Position 98-1 were effective for the year ending
March 31, 2000 consolidated financial statements.

Year 2000 Issue.  The "Year 2000 Issue" arises because most computer systems and
---------------
programs were designed to handle only a two-digit year, as opposed to a four-
digit year.  The Company has not experienced and does not anticipate any
material adverse effects from Y2K on its operations or financial position.

ITEM 3.    Quantitative and Qualitative Disclosure about market risk

Not Applicable

                                 Page 17 of 21
<PAGE>

                          PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings:

          As with other companies in industries similar to Silicon Valley
          Research, Inc., the Company is subject to the risk of adverse claims
          and litigation on a variety of matters, including infringement of
          intellectual property, intentional and/or negligent misrepresentation
          of material facts and breach of fiduciary duties.

Item 2.   Changes in Securities and Use of Proceeds: Not Applicable

Item 3.   Defaults Upon Senior Securities: Not Applicable

Item 4.   Submission of Matters to a Vote of Securities Holders: Not Applicable


Item 5.   Other Information: Not Applicable

                                Page 18 of 21
<PAGE>

Item 6.   Exhibits and Reports on Form 8-K:

                                             (A)  Exhibits:

Exhibit
Number    Description of Exhibit
------    ----------------------

(a)(1)    The financial statements filed as part of this Report at Item 1 are
          listed in the Index to Financial Statements and Financial Statement
          Schedules on page 2 of this Report.

(a)(2)    The following exhibits are filed with this Quarterly Report on
          Form 10-QSB:

3.01      Registrant's Articles of Incorporation as amended to date
          (incorporated by reference to Exhibit 3.01 of Registrant's
          Registration Statement on Form S-1 (File No. 2-89943) filed March 14,
          1984, as amended (the "1984 Registration Statement")).

3.02      Registrant's amendment to Amended and Restated Articles of
          Incorporation (incorporated by reference to Exhibit 3.02 of
          Registrant's Quarterly Report on Form 10-Q for the quarter ended
          September 30, 1998).

3.03      Registrant's bylaws, as amended to date (incorporated by reference to
          Exhibit 4.01 of the 1984 Registration Statement).

3.05      Amendment to Bylaws dated November 12, 1996 (incorporated by reference
          to Exhibit 3.04 of Registrant's Quarterly Report on Form 10-Q for the
          quarter ended December 31, 1996).

27.00     Financial Data Schedule


                                             (B)  Reports on Form 8-K:

No Reports on Form 8-K were filed during the quarter covered by this report.

                                 Page 19 of 21
<PAGE>

                                   SIGNATURE



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                    SILICON VALLEY RESEARCH, INC.



Date:  August 14, 2000              /s/ James O. Benouis
       ---------------              --------------------------------------------
                                    James O. Benouis
                                    President and
                                    Chief Executive Officer


                                    (Chief Financial and Accounting
                                    Officer)

                                 Page 20 of 21